Hungary’s central bank raises O/N, one-week collateralised loan rates by 95 bp to 1.85 pc

The Monetary Council of the National Bank of Hungary (NBH) decided to raise the rates for the central bank’s O/N and one-week collateralised loans by 95 basis points to 1.85 percent at a meeting on Tuesday.

The Council left the base rate and the O/N central deposit rate unchanged at 0.90 percent and -0.05 percent, respectively.

Meanwhile, central bank governor György Matolcsy unveiled a package of measures to help mitigate the economic fallout of the novel coronavirus outbreak.

The measures will be worth 3,000 billion forints (EUR 8.3bn), equalling 6 percent of GDP, Matolcsy said.

The central bank will make up to 1,500 billion forints of cheap and stable financing available to the SME sector in the framework of a programme dubbed Funding for Growth Scheme Go! It will include 500 billion forints that has not been drawn down under the NBH’s earlier launched FGS fix programme.

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FGS Go! will operate with the same conditions as earlier FGS phases: the NBH will continue to provide refinancing loans to banks at 0 percent, and interest to be paid by SMEs will be capped at 2.5 percent.

Investments loans, including leases, will still be available, but the maximum maturity of refinancing loans will be set at 20 years in order to secure financing for protracted investment projects with a slower payback period.

The total also includes the 250 billion forint dividend the NBH will pay into the central budget on 2019 and the cut of the mandatory reserve rate to zero which will free up another 250 billion forints, Matolcsy said.

Matolcsy put GDP growth for this year at 2-3 percent.

Source: MTI